The Esztergom plant of Magyar Suzuki has produced more vehicles than the other OEMs here, and local sales are also on a tear. Executive General Manager Róbert Krisztián talks about current successes and future plans.
Operating in Hungary for 25 years, the Magyar Suzuki plant is the third largest worldwide for the Suzuki group, and with 185,000 vehicles rolling out of the plant, it was the leader in production here. The factory in Esztergom is also the only one producing the Vitara for global sales. Launched last year, the Vitara is one of Suzuki’s premium models.
Along with experiencing healthy growth in production, the Hungarian unit of Suzuki is also a leader in automotive sales in this country, capturing close to 10% of the market last year and already grabbing a share of nearly 12% this year.
We interviewed Róbert Krisztián, executive general manager of Magyar Suzuki Zrt., about the benefits and challenges of making and selling vehicles in Hungary.
What are the advantages on locating production here in Hungary?
At the end of the 1980s, Suzuki was at the stage of establishing a global footprint. In the framework of this program, it was decided that a factory here in Europe was needed. Several locations were studied within Europe, but the final decision was to set up in Esztergom in Hungary.
The main reasons for choosing Esztergom were because it had very well-trained manpower, Hungary’s infrastructure was one of the most developed among Eastern-European countries at that time and the attitude of the then-Hungarian government and the delegation negotiating with Suzuki Japan made a very good impression on our colleagues.
Times have changed since Suzuki first came to Hungary. Do you still see special advantages in the labor force here?
Nowadays we have workers with a wide range of experience and knowledge, providing a very high quality of work. With our current workforce, we can work much more efficiently, and they are very open to Japanese practices like “kaizen” (continuous improvement). Our current workers are more productive than the ones we used to have at the beginning.
I think this greater productivity partially balances the salary increase that we had in Hungary, but the current salaries are still much lower than those in Western Europea. I think the current issue is not the size of the salary but rather the limited available workforce. In the near future, our greatest challenge is to find enough proper workers.
What are some of the ways your factory helps Esztergom?
We have always had very good cooperation with the actual leaders of the city. Our interest is to maintain a good, working relationship with the municipality. Magyar Suzuki actively participates in CSR activities. There is a policy at the company that our sponsorship activities should prioritize Esztergom and its surroundings.
The company supports different cultural events, like “Bridge Running,” from Esztergom to Sturovo via Maria Valeria bridge attracting thousands people. Basically all the local summer events in Esztergom are sponsored by us. We also sponsor sport associations, including the local rugby team. Besides these, the company provides cars for public institutions like Esztergom Hospital, to be able to arrange the blood transportation between Budapest and our city.
How big is the Hungarian Suzuki factory compared to others around the world? Is it still in the top three?
Yes, it still is. Besides the main Asian plants (Japanese and Indian), Magyar Suzuki is one of the main plants of Suzuki, and in the future strategy, the Hungarian plant is still expected to produce for Europe and globally, as always.
How much work was involved in retooling the factory to start making the Vitara last year?
Vitara was a very special project for us. We started a modernization, which is still an ongoing project in the factory. The modernization has had several stages, including installation of new machinery lines and restructuring of the old and sub assembly lines in order to make the production even more efficient and parallel to that ease job stations. The factory has implemented robots that are able to build the Vitara. We expect to finish the modernization by the beginning of next year.
Vitara has been exported to five continents, and more than 100 countries already. Magyar Suzuki has become an ambassador of Suzuki products worldwide. That means we not only have to meet the expectations of the European customers but also the American, African, Asian and Australian customers. But probably among the most exigent customers are the Japanese. We have quite large exports to Japan.
On the one hand, it is a great challenge to fulfil all these expectations; on the other, Vitara’s success has gone even beyond our expectations. This is actually causing headaches for our plant. We have carried out many improvements to increase our capacity, but I must admit that, even today, we cannot fully fulfill the market demand.
Is the Vitara the main product you make in Hungary? Are there many other factories making Vitara in the world?
Our plant is the only one producing Vitara globally. At Suzuki there is a policy that each plant produces a certain model for the global market. However, some big countries have the permission to produce other models for the domestic market, as well. So Vitara has also been produced in China, but only for the local market.
What other models are being produced at the Suzuki plant? What about motorcycles and boat motors? Are those produced here or only sold here?
Practically speaking, we have been producing three models: Vitara, S-Cross and Swift. Volume-wise, the main model is Vitara. Regarding motorcycles and boat motors, Magyar Suzuki only plays a role as a distributer, importing them from other plants.
How have sales of the Vitara been going worldwide, and how does this impact the rate of production at your plant?
Over 185,000 Suzuki cars were produced at our plant last year, and out of these, almost 90,000 were the Vitara. The production of the new model only started from the second quarter, but its production rate was already over 50% in 2015. This year we expect that Vitara’s production rate will exceed last year’s, to 60%.
How have sales of the Vitara and other Suzuki models been going in Hungary?
In Hungary sales have been going even better than globally. Last year, 7,500 new Suzuki cars were registered here. Magyar Suzuki was able to achieve a 9.75% market share in 2015. Compared to the previous year, that means a 58% increase. I would say that’s quite a steep rise. The tendency is continuing this year. By June 20, some 4,848 new Suzuki cars were registered in Hungary, giving the brand 11.7% market share in the country. We have a good chance of reaching 5,000 in the first half year.
Besides Vitara, all other models are doing well. Swift is the market leader in the “B” segment, S-Cross is in fifth place in the “C” segment; Celerio is second in the “A” segment. We have just started selling Baleno. I believe that it will be a success story.
What are some of the future developments you expect at the plant?
Magyar Suzuki will continue to be a global supplier and the Hungarian plant will be considered a main pillar for Europe at the Japanese car manufacturer. In the future, the main challenge for the Hungarian factory will be to react very flexibly to market demand, handling tasks such as producing much more of one model than the other. We are working on this challenge continuously. The other big challenge, as I already mentioned, will be the workforce.